Outmigration deprives Nova Scotia economy of $1.2 billion a year

“As a province, we spend about $250,000 per person until the age of 25, primarily on education,” writes Fred Morley. “But just as these youngsters are about to start paying taxes, we let them slip away to other provinces.” (FOTOLIA)

We’ve heard over and over again there’s no silver bullet to our economic challenges, and that’s true.

But if I had to put my money on a solution, it would be keeping our youth in the province.

A growing population is as important to a community as blood is to a person. Lose too many people from your community and you are in trouble.

Strong population growth drives the economic health of a region. It supports business, as more people consume more goods and services and it ensures a robust labour force.

A growing population also contributes more tax revenues for government to spend on new and improved services without increasing the tax rates.

In this year’s Halifax Index, the Halifax Partnership has published a special analysis on youth retention that presents some pretty startling, yet promising, numbers for Nova Scotia.

As a province, we spend about $250,000 per person until the age of 25, primarily on education.

But just as these youngsters are about to start paying taxes, we let them slip away to other provinces.

Just as we are about to get a return on our investment, we stop investing and our youth start paying taxes somewhere else.

The provincial government’s net loss in revenue over a lifetime, including all the health costs that pile up in our golden years is about $80,000 per university graduate.

On average, Nova Scotia sees a net loss of 1,300 people between the ages of 20 and 29 each year. It’s an exodus that hurts us economically.

An estimated $1.2 billion in lifetime after-tax income is lost each year, and an estimated $46.4 million in future provincial net-revenues is also lost. Out-migration makes the labour pool shallower, affecting the quality and cost of labour for business.

So here’s the opportunity: Eliminating net outmigration over the past 10 years could have generated over half a billion dollars in additional provincial revenue.

A focus on retaining new university graduates would have yielded well over $1 billion in provincial revenue over the last decade.

Eliminating net youth out-migration would double our growth rate for GDP in any given year and make us the fastest-growing province in Canada.

Solve youth retention and you solve our economic growth problem.

Now it’s not all bad. Halifax’s population grew by 1.1 per cent from 2013 to 2014, to over 414,000.

Growth was on par with the national average and third among benchmark cities in the annual Halifax Index Report. Full-time job growth was the fastest of any of our benchmark cities last year at 1.2 per cent.

The Conference Board of Canada tells us that we will be the fastest growing city in Canada this year and that next year Halifax will represent more than 50 per cent of the population of the province. Not bad at all, but there’s more to do.

Halifax youth continue to struggle with an unemployment rate of 13 per cent last year. Thirty-four per cent of all our unemployed are between the ages of 15 and 24.

Among those who are working, a large number are underemployed, working in jobs for which they are overqualified.

Statistics Canada estimates that in Nova Scotia, 42 per cent of employed university degree holders between the ages of 25 and 34 are working in jobs that don’t require a university degree.

Keeping our kids and solving our growth problems require everyone to play a role. We need to get busy.

We have to stop the group-think that says sending kids down the road is a good thing. The urban legend is that they get experience and come back. The statistics tell us that they don’t come back, at least not until they’re of retirement ages and starting to pressure the health-care system.

So what does a short list of other actions look like?

As businesses, we have to hire and train our youth. Outside of a few head-and-regional-office companies, we are not really doing that as a rule.

Research from the Canadian Federation of Independent Business shows that Atlantic Canadian small and medium-sized enterprises spend even less on employee training than their counterparts in other provinces — about 33 per cent less per employee in Nova Scotia, compared with the national average.

The province has already started to enter this space with programs like Graduate to Opportunity and START, which provide financial incentives for employers to hire recent post-secondary graduates and apprentices. The Graduate to Opportunity program provides a two-year wage subsidy to qualifying employers who hire a worker who graduated from school within the previous year.

Many businesses are already actively involved in creating opportunities for young workers. RBC, EY, ADP, SimplyCast, Citco and lots of other companies hire new grads because they understand the value young talent brings to their companies. It is their competitive advantage and a reason to locate and expand in Halifax.

More and more youth are creating their own futures in Halifax. Universities are helping.

Dalhousie’s Starting Lean Initiative has created a space for student entrepreneurs and their 100K Competition is making $100,000 in funding available to winning student start-ups.

The Sobey School of Business at Saint Mary’s launched The Startup 100 program this year, which brought together youth, entrepreneurs, mentors, and community leaders to create 100 youth-driven entrepreneurial ventures in 50 communities throughout the province in 100 days.

And for those who still want to work for someone else, co-op, internship and apprenticeship programs are proven job machines.

So, yes, there is something we can do right now.

We can invest in our future workforce and keep our youth here at home.

Fred Morley is executive vice president and chief economist of Halifax Partnership